On 13 January 2026 the OECD held a webinar to discuss the side-by-side arrangements issued earlier in the month. The side-by-side (SbS) arrangement would be available where a country’s tax regime has similar policy objectives and scope to the global minimum tax. The SbS and ultimate parent entity (UPE) safe harbours would apply to multinational groups headquartered in jurisdictions that meet the requirements for an eligible tax regime.

A multinational group electing for the SbS safe harbour would not be subject to the income inclusion rule (IIR) or the undertaxed profits rule (UTPR). The UPE safe harbour would provide a safe harbour with respect to the domestic profits of multinational groups headquartered in jurisdictions which have a pre-existing eligible domestic tax regime. A multinational group that elects for the UPE safe harbour will not be subject to the UTPR in respect of the profits located in the jurisdiction of the ultimate parent entity. The UPE safe harbour is effectively a roll forward of the UTPR safe harbour, but with stricter rules.

As part of the SbS package, some further simplifications have been worked out to help businesses to reduce compliance time and costs. The simplified effective tax rate (ETR) safe harbour would reduce compliance costs by enabling multinationals to build computations based on the information already available to them, reducing the number of adjustments needed. This safe harbour would apply from 1 January 2027 if a business elects for it, or countries could bring it in a year earlier.

A further simplification would be the extension of the transitional CBC Reporting safe harbour for one more year, so it would be running for a total of two years. This would give taxpayers additional time to understand and move into the permanent safe harbour.

There is a work program for additional simplifications. This would include integrating routine profits tests and de minimis tests into the permanent safe harbours. Also, simplifications would be incorporated into the GloBE rules themselves, with a particular focus on facilitating continuity between the simplified ETR and GloBE calculations. There would be administrative guidance, including simplifications relating to investment entities and minority owned constituent entities (MOCEs).

In relation to the simplified ETR safe harbour there would be a minimal level of adjustments to be made by taxpayers. These adjustments would relate to, for example, dividends and equity gains and losses, but most of the ETR calculation would be based on information that the taxpayers already have. In relation to tax, the deferred tax accounting would be applied but with a subset of deferred tax liabilities, recast at 15%. There would be a simplified approach for post-year-end tax adjustments, a subject that was discussed extensively with the business advisory group to explore possible amendments.

In relation to substance-based tax incentives, there would be greater alignments with qualified refundable tax credits (QRTCs). The potential difference in treatment with non-refundable tax credits has been a cause of concern. The ETR will be calculated as the tax before qualified tax incentives, divided by income. Qualified tax incentives are the generally available incentives that are either based on expenditures or based on the amount of tangible property produced in the jurisdiction. Super deductions would qualify as tax incentives for this purpose, but income-based incentives would not. There is to be a cap based on 5.5% of payroll or depreciation of tangible assets located in the jurisdiction. There will be an alternative cap of 1% of the carrying value of depreciable tangible assets (excluding land), subject to a five-year election.

The substance-based incentives safe harbour applies to the relevant portion of top-up tax, effective from 1 January 2026. The SbS safe harbour is also applicable from 1 January 2026.

The US is listed in the central record as having an eligible SbS regime. So far the US is the only regime recognized, however there is a limited window for other jurisdictions to try to achieve SbS regime status.

A stocktake would be done to ensure that any substantial risks to the level playing field are addressed, to preserve the policy objectives of the global minimum tax and the SbS system. There are ongoing risks to the level playing field, and if evidence of actual systemic risks emerges, these will be addressed by targeted action where necessary.

The next steps will involve more simplification, for example looking further at the UTPR. There will be guidance on technical issues, for example the treatment in relation to hyperinflation economies, joint ventures, mobile assets or real estate investment vehicles. There will be integrity rules to prevent multinational groups entering into transactions to avoid top-up taxes. Work will be done to streamline the GloBE information return (GIR).

On the tax administration side there is the Amsterdam dialogue which is looking at the compliance approach of tax administrations. This involves engagement in discussions with taxpayers and administrations that are affected by the rules. There is a workstream on the simplification of up-front compliance, up to the point of filing the GIR. This looks at procedures such as registration requirements. A second workstream looks at the compliance procedures, engagement with the process, looking at risk filters that could be standardized, The Forum on Tax Administration (FTA) has done work on tax administration that can be used as a reference.

Technical assistance and impact assessments are being done by economists at OECD and at partner organisations such as those in the platform for collaboration on tax (PCT), and regional organisations such as CREDAF and ATAF.